Managing Exposure to Creditors
How do I manage exposure to creditors?
It’s important to protect your business interests from creditors as far as possible. Whether you’re purchasing goods on credit or dealing with substantial invoices, there are various ways you can stay in control and ensure that payment processes are suitable for your business as well as your suppliers. A decent set of terms and conditions can provide a solid foundation for a business relationship and it’s then largely a matter of managing that relationship effectively. If things do become rocky, you should always take steps to avoid legal action, particularly winding up applications or costly court battles.
How can I use Ts & Cs to manage exposure?
Whether you’re selling or buying, ensuring that you have properly written terms and conditions in place puts you in the driving seat, helps to avoid future disputes or resolve any issues which do arise. A whole range of matters can be covered in Ts & Cs including price, payment and delivery specifications.
How can I manage relationships with creditors?
As well as building up a degree of trust, it’s important to initially start a business relationship on a solid footing. Make sure that your creditors fully understand your intentions and that you clear up any potential ambiguities. If you do get into financial difficulty, it’s often best to keep relevant parties in the loop and try to reach a compromise solution.
How can I prevent legal action?
Legal action can be extremely expensive so it’s best avoided if at all possible. Always ensure that invoices are settled on time and payments are not missed. Be particularly wary of larger creditors such as banks who may be less willing to compromise if you do get into trouble. Terms and conditions which protect your interests can help to prevent legal action, as can consistent dialogue and a flexible approach. How can I avoid winding up applications? If you fail to make payments and don’t manage to achieve any mutually acceptable agreement with your creditors, they could eventually decide to initiate winding up proceedings. This can lead to your business being put into liquidation so this kind of threat should be taken very seriously indeed and acted on without delay. Always keep your records in order and reply to any legal correspondence immediately to reduce the chance of a successful application.